Question : In contrast to most other businesses, L&T Ltd operates as 200 smaller businesses, each focused on a particular product or industry. This implies a selective distribution of authority and recognises the need for autonomy among decision-makers as decision-making authority is decentralised lower in the chain of command. It enables the business to keep lines of communication open with clients and staff members and quicken talent development. Describe the philosophy L&T Ltd. is using to distribute decision-making responsibilities among the various levels of the hierarchy.
Option 1: Delegation
Option 2: Functional structure
Option 3: Decentralisation
Option 4: Formal organisational structure
Correct Answer: Decentralisation
Solution : Decentralisation refers to the systematic effort to delegate to the lowest level, all authority except which can be exercised at the central point. Following are the functions: 1. Develops initiative among subordinates, 2. Develops managerial talent for the future, 3. Quick decision making. Hence, the correct option is 3.
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